Marginal Implicit Prices for Federal Land Proximity: A Comparison of Local and Global Estimation Techniques
Charlotte Ham, John Loomis, Patricia Champ, and Robin Reich
Project funded through a partnership between US Forest Service Rocky Mountain Research Station and the CSU Center for Environmental Management of Military Lands
Presentation for Camp Resources by Charlotte Ham, 8/7/2012
Past Research on Federal Land Proximity
National ForestsPositive effects were found for proximity to national forest land in the Appalachian
highlands (Cho et al., 2009), in Arizona and New Mexico (Hand et al., 2008), and near McDonald-Dunn Research Forest in Oregon (Kim and Johnson, 2002).
Negligible effects were found on house prices near Arapaho-Roosevelt National Forest in Northern Colorado (Kling et al., 2007).
Negative effects were found after two fire incidents in Angeles National Forest in California (Mueller and Loomis, 2008) and from visible clear-cut in the Oregon study (Kim and Johnson, 2002).
Military LandsIn Central Maryland, a price premium was found only for the largest of the
installations, Fort Meade; other military land proximity measures were insignificant (Irwin, 2002).
Study Area
El Paso County, CO
Hedonic Pricing Method
)()(
)(i
i
zpz
Zp
),...,,( 21 nzzzZ
)(Zpp
Differentiated good
Hedonic price function
Implicit price of attribute
P=f(S,N,L,T; α,β,γ,δ)
P = αS + βN +γL + δT+ ε
ε ~ N(0,σ2In )House structural variables:
House(+), lot (+), garage (+) and basement (+) square footage, age of house (-), and # of bathrooms (+)
Neighborhood factors: School districts: Academy, Cheyenne Mountain, FalconFort Carson, Harrison, Lewis Palmer, Manitou SpringsWidefield and Colorado Springs
Location/environmental variables: Distance to different federal lands:
Amenity (-) Disamenity (+)
Market timing variables: continuous
Empirical Model
Ordinary Least Squares Regression
Geographically Weighted Regression
Marginal Value as % House Price for Federal Land Proximity
Amenity Disamenity
Minimum Lwr Quartile Mean* Median Upr Quartile Maximum
PERCENTAGE OF HOUSE PRICE -8.88% -2.92% -0.21% -1.53% 0.63% 5.05%
MEAN -$23,557 -$7,742 -$557 -$4,049 $1,666 $13,387
MEDIAN -$20,447 -$6,720 -$484 -$3,514 $1,446 $11,620
House Prices: mean=$265,296 median=$230,279
* Mean value in GWR is only estimate provided from OLS.
Evaluated at theMean Price of $265,296:
[-$13,636,$23,556]
Tax revenue (7.7%): [-$1,050,$1,814]
Amenity values for distance to nearest federal land
(-8.879% to +5.014%) (-8.879% to -1.082%)
(1.678% to 4.99%)
Amenity (43%)
Disamenity (11%)
Range (N=1,536)
Conclusion
GWR as one way to address heterogeneity in implicit prices to avoid saying an attribute is not significant when it is the spatial heterogeneity that is masking the significance
Land Economics: characteristics of land uses matter
Land Use Policy: marginal values of open space proximity
Other Research
Thank you!
Questions/Input
Shortcomings
• Value of proximity to homeowners; not other use and non-use values
• Error in variables
• Case study
• Scale of analysis
Amenity Values for
Federal Land Proximity
As Percentage of House Price: 8.879% premium (green) 5.014% discount (red)
Evaluated at theMean Price of $265,296: [-$13,636,$23,556] Tax revenue (7.7%): [-$1,050,$1,814]
Variable OLS GWR AGE -$584 -$1,173BASESQFT $58 $55HOUSESQFT $68 $72GARAGESQFT $82 $85LOTSQFT $1 $25S_ACADEMY $28,361 .S_CHEYMTN $73,500 .S_FALCON -$12,206 .S_FTCARSON -$27,487 .S_HARRISON -$27,632 .S_LEWISPAL $15,126 .S_MANITOU $119,034 .S_WIDEFIEL -$28,946 .TIME $43 $44FEDLAND -$558 -$3,128. The GWR does not include the school districts because they are discrete boundaries.
The End.Thank You!
Credits
Funders: Project funded through partnership between US Forest Service Rocky Mountain Research Station and the Center for Environmental Management of Military Lands
Photographs: Houses: Rick Van Wieren/PikesPeakGallery.com, Pikes Peak/PikesPeakGallery.com Wildlife: ducks: Gary Kramer/ USFWS, preble’s meadow field mouse: USFWSNatural: sunset and stream: Mike Bonar, Elk River Photography, USAFA and Fort Carson websites, Google maps
Paper 2
Marginal Implicit Prices for Federal Land Proximity: A Comparison of Local and Global Estimation Techniques
How do local and global model estimation techniques compare when applying the hedonic pricing method?
Models
Presentation Flow • Introduction
Review past studies
• MethodHedonic Property
• Results
• Conclusion
• Next Steps
Hedonic Price FunctionBUYER
);,...,,,( 21 nzzzxUSELLER
),...,,( 21 nzzzpxy
);,,( yuZ
);,( ZMc
);,()( ZMcZpM
);,( Z
Spatial Components
Spatial Weight Matrix
Model Selection
• Moran’s I and Lagrange Multiplier tests
• Minimize Akaike Information Criteria (AIC):-2(maximized log likelihood – # parameters)